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2026 Guide · Equity Compensation

Stop Renting Your Equity. Lock in Your 83(b) Tax Rate Today

A FIELD GUIDE FOR FOUNDERS & EXECUTIVES

You have exactly 30 days from your grant date to choose how you are taxed. Don’t let a “successful exit” turn into an unpayable tax bill. Missing this window is the common error for Silicon Valley founders.

$849K
Avg. Tax Savings
30
Day Window
$37
Cost to File
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Your 30-Day Deadline Countdown

Days
Hours
Minutes
Seconds

Enter your grant date above to calculate your exact filing deadline.

The IRS grants no extensions. No exceptions.

Your 30-Day Deadline Countdown
29
Days
23
Hours
47
Min
12
Sec
Enter Your Grant Date
Deadline: Enter your grant date above to calculate your exact filing deadline.

The IRS grants no extensions. No exceptions.

The Logic-First Proof (What the Math Actually Shows)

Not filing can cost you a significant amount — paid in ordinary income, in cash, before you've sold a single share.

Without 83(b)

Ordinary Income Tax on Every Vest

$1,850,000

You pay ordinary income tax (up to 37%) on the spread each time shares vest. Even if you haven't sold a single share, a $10M valuation creates a six-figure cash tax bill due immediately.

With 83(b) Filed

Lock In LTCG Rate & QSBS Eligibility

$37

You pay tax on today's value — typically $0.0001/share. All future appreciation is taxed at Long-Term Capital Gains (20%), or may be entirely tax-free under QSBS Section 1202.

MetricWithout 83(b)With 83(b)
Tax Due at Grant$0$37
Tax Due at Vesting$1,850,000$0
Tax Due at Sale$0$999,992
Total Federal Tax$1,850,000$1,000,029

Total Savings from Filing

$849,971

Savings = (FMVvest × Rateord) − (FMVgrant × Rateord + Appreciation × Ratecap)

The Advisor Perspective: Know the Risks

The 83(b) election is almost always the right move for early-stage founders — but it is a calculated risk, not a guarantee. Two scenarios demand careful attention before you file.

⚠ The Forfeiture Trap

You Leave Before Full Vesting

If you pay taxes upfront and then depart the company before your shares fully vest, the IRS does not refund your tax payment. The shares are forfeited; the tax bill is permanent.

⚠ The Irrevocability Rule

The 2026 IRS Stricter Standard

In 2026, the IRS has tightened revocation rules. Unless you can prove a "Mistake of Fact" within 60 days, the election is generally irrevocable. Get the strategy right before you file.

⚠ The Redemption Taint

Hidden Cap Table Risk

Software bots miss this. If your company bought back shares from other investors within a specific window of your issuance, your entire QSBS tax benefit could be void. We provide partner-level cap table review.
⚠ High FMV at Grant

Later-Stage Hires

If you joined at Series B or later, the shares already carry a high Fair Market Value. Filing 83(b) creates an immediate tax bill that may outweigh the benefit. Run the math with an advisor first.

A Founder's 30-Day Window — Mapped Out

The 30-day window sounds simple — until you’re buried in product launches and cap table paperwork. Here’s exactly how the timeline plays out for a founder receiving 1,000,000 shares at incorporation: FMV $0.0001/share at grant, projected $5.00/share at Year 4 vesting.

Jan 1 2025
Grant Date — Clock Starts

Shares Are Issued. The IRS Clock Begins.

FMV is $0.0001/share — total taxable value is just $100. This is your lowest possible tax moment. The 30-day window opens the instant the board approves the grant, not when you sign paperwork.
Total Value at Grant: 1,000,000 × $0.0001 = $100
Jan 1–31 2025
The 30-Day Filing Window

File via IRS Portal. Notify Your Company.

Complete Form 15620 online via the IRS portal (ID.me login required). Pay ordinary income tax on $100 total grant value. Send a copy to your employer within 30 days. Download and archive your confirmation receipt.
Tax Due: ~$37 (37% × $100)  |  QSBS clock starts
Jan 1 2026
Year 1 Cliff Vest — 250,000 Shares

This Is Where It Gets Expensive Without 83(b)

At a hypothetical $1.85/share FMV, the first vesting event creates significant taxable income — due in cash, whether or not you've sold anything.
Without 83(b): ~$171,225 ordinary income tax  |  With 83(b): $0
Jan 1 2027–28
Years 2 & 3 Vesting

Tax Bills Compound with Valuation Growth

Each annual vest triggers a new ordinary income event at whatever the FMV is that year. As the company grows, each event becomes larger. Without 83(b), you are writing increasingly large checks to the IRS before any liquidity event.
Jan 1 2029
Full Vest + LTCG + QSBS Eligible

Exit at Long-Term Capital Gains — or Tax-Free

All 1,000,000 shares fully vested. Because the holding period started at grant (due to 83(b)), the entire appreciation qualifies for Long-Term Capital Gains (20%) rather than ordinary income (37%). If QSBS applies, up to $10M of gain may be excluded entirely.
With 83(b): LTCG on full appreciation  |  Potential $0 federal tax under QSBS

New for 2026: File Online in 15 Minutes

IRS Update

The "Certified Mail or Bust" era is over. As of late 2024, the IRS standardized the process with Form 15620 and a dedicated online portal. The 30-day clock hasn't changed — but the process is now significantly faster.

01

Critical Detail

Verify Your Board-Approved Grant Date

The 30-day clock starts when the board approves the grant — not when you sign the papers. These dates are often days apart. Obtain the board resolution date from your legal counsel before doing anything else.

02

New in 2024

Access the IRS Online Portal via ID.me

Log in at the official IRS portal using your ID.me account. Have your SSN, government-issued ID, and grant documentation ready. If you don't have an ID.me account, allow 10–15 minutes to set one up.

03

FMV Accuracy Matters

Complete Form 15620 — Every Field

Enter your grant details, share quantity, and the Fair Market Value (FMV) as of the grant date. Capital Tax clients receive a pre-populated Form 15620 to ensure no required fields — TIN, restriction descriptions, transfer conditions — are missed or incorrectly entered.

04

Save Permanently

Submit, Download Your Receipt & Notify Your Company

Download your Digital Confirmation Receipt immediately upon submission. This is your only proof of filing. Store it with your cap table documents. You must also provide a copy to your employer or stock issuer within 30 days of the grant date — this is a separate legal requirement from the IRS filing.

The 83(b) Compliance Checklist

All four requirements must be completed within 30 days of your grant date. Click each to track completion.

83(b) Filing Requirements

4 / 4 Complete

No Extensions. No Exceptions.

File with the IRS within 30 days. The IRS does not grant extensions. One missed day voids the election permanently — there is no administrative cure.

Legal Requirement

Notify your company. Provide a copy of the filed Form 15620 to your employer or stock issuer within 30 days of the grant date. This is a separate legal requirement from the IRS filing itself.

Start the QSBS 5-year clock. Filing an 83(b) begins the holding period for the Section 1202 Qualified Small Business Stock exclusion — up to $10M in tax-free capital gains. The clock starts at grant, not at vesting, only if you file.

Check California state requirements. California has separate notification requirements for 83(b) elections. If you are a CA resident, confirm with your Capital Tax advisor whether a state-level filing is required for your situation.

Is an 83(b) Right for You?

The election is powerful but not universal. Use this as a starting framework — then confirm with a Capital Tax CPA before filing.

Filing Usually Makes Sense When…Think Twice If…
Your shares are worth near-zero at grant (typical for founders)Shares already have a high FMV — e.g., you joined at Series B+
You expect significant company valuation growth before vestingYou’re uncertain about staying for the full vesting period
You want to lock in the QSBS 5-year holding period from day oneYou don’t have cash to pay the upfront tax on the current FMV
You want all future appreciation taxed at LTCG (20%) not ordinary income (37%)The 409A valuation is significantly above the exercise price

Verify Your 83(b) Eligibility Before Your Next Exit

If your stock checks all these boxes, you are in a strong position to claim the exclusion. When in doubt — verify before it’s too late.

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Expert FAQs

Can I file an 83(b) for Stock Options (ISOs/NSOs)?

No. You can only file an 83(b) on “property.” To use this for options, you must early-exercise your options into restricted stock first.

Yes. While previous years allowed “model letters,” the IRS now prefers Form 15620. We provide this form pre-populated for our clients to ensure no data points (like TIN or restriction descriptions) are missed.
This is a “fatal” error. There are no administrative cures or extensions for a missed 83(b) filing. If you missed it, our team focuses on secondary strategies like “Option Refreshers” to mitigate the damage.
An 83(b) election allows founders who receive restricted stock to pay taxes based on the stock’s value at the time of grant instead of when it vests. Filing early can lock in a lower tax basis and allow future gains to be taxed as long-term capital gains rather than ordinary income.
IRS Form 15620 is the official form introduced to standardize 83(b) election filings. It includes required details such as the taxpayer’s information, stock description, grant date, and restrictions. Filing the correct form helps ensure the IRS accepts the election.